24 Jul 2020 20:10 IST

Brand is the most tangible weapon in a crisis: Nestle’s Narayanan

A strong and robust brand helps the business to come out of a deep problem; defines heart and soul

Every crisis is an opportunity for a business. And businesses that capitalise on this opportunity create everlasting brands, according to Suresh Narayanan, Chairman and Managing Director, Nestle India Ltd.

With over 35 years in the FMCG industry, across senior management roles in leading companies, Narayanan is no stranger to crisis, prominent among them being the Maggi row of 2015.

“Crisis doesn’t come with a calling card. It creeps in, falls on you, and grows on you. It then blows up and creates consequences. Like the pandemic we are facing today. Life can be upended by a crisis. But every crisis can also give rise to an opportunity,” said Narayanan, at the Brand Value Management webinar series hosted by Madras Management Association. Narayanan is a unique business chief as he is neither an MBA nor an engineer nor an accountant. He holds a Master's degree in Economics from the Delhi School of Economics and cut his teeth in that ‘school for CEOs’, Hindustan Unilever.

In his speech interspersed with anecdotes and examples from his long stint at Nestle, Narayanan elaborated on the principles that help nurture brands and turn a crisis into an opportunity.

Core brand principles

1. The brand is your most robust intangible, but in a crisis it is the most tangible. A strong and robust brand helps the business to come out of a crisis. The brand is the most tangible weapon against a crisis.

2. The brand defines the heart and soul of your business. Brand is the essence of who you are. It defines the organisation’s purpose, values, outcomes and passion. So, businesses must nurture their brand like a member of the family and not treat it as somebody from outside.

3. A robust set of brand principles will help you and bail you out during a crisis. Managing a brand or a business is not a matter of accident. One must follow well-set principles that make brands succeed. (elaborated later)

4. A brand has to be nurtured in good times. Watering in a crisis does not help. If you have neglected nurturing your brand and its equity, the principles that it demands, the brand is not going to be of use in a crisis. A brand has to be nurtured in good times so that it helps you in the not so good times.

5. The brand defines the purpose, values and partnerships of your organisation. Any organisation is built on the foundation of purpose, it is inspired and nurtured by values, and it is operationalised by partnerships. Everything else in the business – factories, branch offices, all the glitz and glamour – is worth nothing without purpose, values and partnerships. They define the behaviour and response mechanism of the organisation.

How Nestle viewed crisis

Narayanan used the example of Nestle to explain how businesses can capitalise on a crisis.

Tracing the 154-year path of Nestle, Narayanan said that the company was set up in response to high infant mortality in 19th century Switzerland. A kind-hearted man named Henri Nestle, a German immigrant and a trained pharmacist, came up with a concoction containing wheat flour, milk, vitamins, minerals, sugar and water, which helped his neighbours’ starving children survive. Upon the suggestion of the village head, Nestle turned this into a business to help more children — with the product Farine Lactee Nestle (Cerelac now), thus setting off a journey into the food and consumer goods business.

 

“Over the years, the company has grown through own organic brands and acquisitions. Today, we employ over 300,000 people. Many of our brands began with a social purpose,” said Narayanan.

* Kitkat was introduced to factory workers in the UK in the 19th century as a quick energy product they could snack on between breaks, and which could fit into the back pocket of their overalls.

* Nescafe was the result of a crisis. An excess coffee crop in Brazil led Nestle scientists to crack the first prototype of what became instant coffee. “With American troops travelling all across the world during the Second World War drinking Nescafe, the world got to drink Nescafe, and the brand went on to dominate the global market.”

* Milo, a brand founded in Australia, also emerged from a crisis. Australia was having a serious issue with children not getting adequate nutrition. Thus was launched Milo, an energy drink, almost 80 years ago.

“Those who are able to see virtue in an opportunity (during a crisis) create a brand. And those brands last,” said Narayanan, pointing to Kitkat, a 90-year-old brand, and Nescafe and Milo, which are over 80 years old. “In India, we are 108 years old. Longevity comes when you have strong genes, strong foundations, and principles of nurturing, which you do not ever violate in all the history you go through.”

Narayanan also talked about the 6Cs that must be followed to create a successful organisation. These, he said, are part of the robust set of brand principles that can bail out a business in a crisis.

* Connect across the value chain: Nestle, Narayanan said, was able to bring Maggi back from the brink of death in 2015 (in India, Maggi was shelved for five months due to allegations of excess lead in Maggi samples) due to the large ecosystem it has — 400,000 wheat farmers who produce the wheat that goes into the flour that makes Maggi, a couple of thousand spice farmers, a couple of thousand suppliers, 1,800 distributors, 4.5 million outlets.

Today, during the pandemic, Maggi is the most sought-after brand, said Narayanan, for it is “a quick snack and a quick form of assuaging hunger.” “We have a network of 5,000-10,000 suppliers, many of whom are MSMEs. This is the time when we have to stand by them, because they have stood by us. So, we are helping them with orders, permissions, manufacturing and advance payments. We are privileged to own a strong brand and we must reach out with that privilege to help people in these difficult times. We are also reaching out to the government to help educate food processing industries on safety – social distancing, food practices, good manufacturing practices.”

* Compliance: During a crisis, the values, trust and principles of a brand are put to test. So, if a brand is ethical and honest and its moral compass is headed true north, it has nothing to fear. Only when there is duplicity, deception and dissonance, does the business model starts to shake.

* Creation: Today, Nestle is a digital company and a millennial organisation that is creating new content and new properties. One such property is ‘Ask Nestle’, a website with information on good nutrition, growing habits, and common nutrition practices. Maggi.in is also reaching out to consumers who are now cooking at home – with different ideas and recipes. “Maggi is not the centre-piece here; it is a service to a cause. Because of all these efforts, my core suppliers survive and thrive.”

Consistency: This is not the time for opportunistic plans. It is the time for compassionate plans, said Narayanan. “You will make your money and profits and your value chain will carry on. Don’t worry about losing a few thousands today, you will make many millions tomorrow. This will happen if you are consistent.”

Competitive: A crisis is the time when an organisation/business must ask itself these questions: Am I differentiated or am I just like everybody else? What is the game that I want to play? A competitive game or an average game? “If you are like everybody else, you will divide the cake equally. If you are differentiated, you will have six pieces (of the ten pieces the cake is divided into). And four pieces will be divided amongst the other players.”

Compassion: “This is the time to give, not the time to take. The more you give, the more you will get.”

(Swetha Kannan is a freelance writer and editor based in Chennai. She was formerly a journalist with BusinessLine.)

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